If you are looking to get a Stafford student loan, the interest rates you’ll pay are doubling. What are the hard numbers? Can the situation be fixed? Join Todd Piro (in for Brad Drazen), Merri-Lee Mayland and me Monday morning at 6:30 for the answers. Tune in if you can!
When college students wake up Monday morning, the interest rates on their anticipated government-back Stafford loans will have doubled. And they have the do-nothing, perpetually gridlocked Congress to thank for it. A Congress, by the way, that is now on Fourth of July break.
More than 73,000 Connecticut college students will see their Stafford loan rates go from 3.4 to 6.8 percent. A substantial increase for students already heavily in debt. According to the Connecticut Public Interest Research Group (ConnPIRG), the increase will cost students in the state some $68.4 million. That translates into a $937 increase in debt per student, per loan, according to the group.
On the national level, 7 million students have Stafford loans. The interest rates double because the one-year freeze on the rates runs out Monday. Each student will see an increase of almost $1,000 in debt.
However, there is a chance the situation can be rectified. Connecticut US Rep. Joe Courtney (D-2nd) has been a leader both in Connecticut and nationally on the effort to keep the rates where they are. The Shad had a lengthy conversation with Courtney over the weekend and he offered at least a glimmer of hope. He says there is still time to fix the problem, but not a lot of time.
Courtney says most of the loans are underwritten in August—and the rates can be changed back retroactively. He is the sponsor of a bill that would keep the lower rates in place for two years. As a minority Democrat in the House, Courtney needs some 218 signatures on a “discharge petition” to force a vote on his bill. He’s more than 20 signatures short right now.
There are various proposals in the Senate but Courtney says some of them are worse than doing nothing since they contain no cap or a very high cap on the rates and ties them to ten-year treasury bills.
There is actually a silver lining in having lawmakers go on break without having passed a student loan bill. In the short run, it gives students, their parents and the general public to pushback on legislators as they return home. Courtney thinks the blowback will be substantial and may create some momentum for his bill moving forward.